Currency Boards: The Ultimate Fix?

January 1, 1998

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Format: Chicago

Atish R. Ghosh Currency Boards: The Ultimate Fix?, (USA: International Monetary Fund, 1998) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The growing integration of world capital markets has made it fashionable to argue that only extreme exchange rate regimes are sustainable. Short of adopting a common currency, currency board arrangements represent the most extreme form of exchange rate peg. This paper compares the macroeconomic performance of countries with currency boards to those with other forms of pegged exchange rate regime. Currency boards are indeed associated with better inflation performance, even allowing for potential endogeneity of the choice of regime. Perhaps more surprisingly, this better inflation performance is accompanied by higher output growth.

Subject: Currency boards, Exchange rate arrangements, Exchange rates, External position, Foreign assets, Foreign exchange, Inflation, Prices

Keywords: Adoption of a currency board, Board country, Caribbean, Currency, Currency board country, Currency board members, Currency board regime, Currency Boards, Exchange rate arrangements, Exchange rate observation, Exchange rates, Fixed Exchange Rates, Foreign assets, Global, Growth, Inflation, Inflation differential, Inflation performance, Inflation rate, Money growth rate, Peg currency, Performance of currency board regime, Structural equation, WP

Publication Details

Pages:

23
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1998/008
Stock No:

WPIEA0081998
ISBN:

9781451927955
ISSN:

1018-5941

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